Press Release

Eagle Bancorp, Inc. Announces Another Quarter of Record Earnings With Second Quarter 2018 Net Income up 34% Over 2017

Company Release - 7/18/2018 4:15 PM ET

BETHESDA, Md., July 18, 2018 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (the “Company”) (NASDAQ:EGBN), the parent company of EagleBank, today announced record quarterly net income of $37.3 million for the three months ended June 30, 2018, a 34% increase over the $27.8 million net income for the three months ended June 30, 2017. Net income per basic common share for the three months ended June 30, 2018 was $1.09 compared to $0.81 for the same period in 2017, a 35% increase. Net income per diluted common share for the three months ended June 30, 2018 was $1.08 compared to $0.81 for the same period in 2017, a 33% increase.

For the six months ended June 30, 2018, the Company’s net income was $73.0 million, a 33% increase over the $54.8 million of net income for the same period in 2017. Net income per basic common share for the six months ended June 30, 2018 was $2.13 compared to $1.61 for the same period in 2017, a 32% increase. Net income per diluted common share for the six months ended June 30, 2018 was $2.12 compared to $1.60 for the same period in 2017, a 32% increase.

“We are very pleased to report another quarter of favorable earnings, which continued to exhibit positive trends of balance sheet growth, revenue growth, solid asset quality and favorable operating leverage,” noted Ronald D. Paul, Chairman and Chief Executive Officer of Eagle Bancorp, Inc. Mr. Paul continued, “The Company’s assets ended the quarter at $7.88 billion, representing 9% growth over the second quarter of 2017 and total shareholders’ equity exceeded $1.00 billion for the first time. Second quarter 2018 earnings resulted in a return on average assets of 1.92%, return on average common equity (“ROACE”) of 14.93% and a return on average tangible common equity (“ROATCE”) of 16.71%.” Mr. Paul added “Our financial results in the second quarter continue to exhibit balanced and consistent performance.”

While the lower effective tax rate of 25.1% for the second quarter of 2018 resulting from the Tax Act signed in December 2017 contributed to higher net earnings, on a pre-tax basis, second quarter earnings in 2018 increased 10% over the second quarter in 2017 and increased 4% over the first quarter of 2018.

The Company’s performance in the second quarter of 2018 as compared to the second quarter of 2017 was highlighted by 11% growth in both average total loans and average total deposits, by a relatively stable net interest margin of 4.15% as compared to 4.16% and by 9% growth in total revenue to $83.8 million. Mr. Paul noted that the Company continues to focus more on growth of average balances year over year and quarter over quarter since that measure relates more directly to income statement results. Comparing average balances in the second quarter of 2018 versus the first quarter of 2018, average loan growth was 2% and average deposit growth was 3%.

Mr. Paul added, “In the second quarter of 2018, period end total loans growth was a modest 1% over March 31, 2018, while total deposits increased 2% over March 31, 2018. New loans settled in the second quarter of 2018 were similar to the first quarter of 2018, which had a 3% growth rate, however, substantial loan payoffs and delays in new loan fundings occurred in the second quarter which restrained net loan growth. The total of unfunded loan commitments remains stable over the last six quarters at approximately $2.4 billion. The Company continues to emphasize strategies focusing on achieving core deposit growth. Significantly, the mix of noninterest deposits to total deposits averaged 33% in the second quarter of 2018 as compared to 32% in the second quarter of 2017. Since spread earnings are the key element of our revenue, we remain focused on our net interest margin, which has been stable as market rates and related deposit rates have continued to increase.”

The net interest margin was 4.15% for the second quarter of 2018, down one basis point from the second quarter of 2017 and down two basis points from the first quarter of 2018. Mr. Paul noted, “While we are seeing a higher cost of funds, we are also experiencing higher loan yields, in part due to rate adjustments in our predominately variable and adjustable rate loan portfolio.” The Company’s net interest income increased 12% in the second quarter of 2018 over 2017 as the Company has continued its emphasis on disciplined pricing for both new loans and funding sources. The Company believes that it has a superior net interest margin compared to peers, but it is also focused on all factors that contribute to Earnings Per Share (“EPS”) growth.

For the first six months of 2018, total loans grew 4% over December 31, 2017, and averaged 12% higher for the first six months of 2018 as compared to the first six months of 2017. At June 30, 2018, total deposits were 7% higher than deposits at December 31, 2017, and averaged 10% higher for the first six months of 2018 compared with the first six months of 2017.

Total revenue (net interest income plus noninterest income) for the second quarter of 2018 was $83.8 million, or 9% above the $76.7 million of total revenue earned for the second quarter of 2017 and was 3% higher than the $81.1 million of revenue earned in the first quarter of 2018. For the six month periods ended June 30, total revenue was $164.9 million for 2018, as compared to $149.7 million in 2017, a 10% increase.

The primary driver of the Company’s revenue growth for the second quarter of 2018 as compared to the second quarter of 2017 was its net interest income growth of 12% ($78.2 million versus $69.7 million). Noninterest income (excluding investment gains) declined by 21% in the second quarter 2018 over 2017 ($5.5 million versus $7.0 million), due substantially to lesser sales of Small Business Administration (“SBA”) and residential mortgage loans and the resulting gains on the sale of these loans, and by lower revenue associated with the origination, securitization, servicing and sale of FHA Multifamily-Backed Government National Mortgage Association (“GNMA”) securities. Mr. Paul added that “while these business lines do exhibit variations in revenue from quarter to quarter all three business units above are important to our long term continued success.”

Asset quality measures remained solid at June 30, 2018. Net charge-offs (annualized) were 0.05% of average loans for the second quarter of 2018, as compared to 0.02% of average loans for the second quarter of 2017. At June 30, 2018, the Company’s nonperforming loans amounted to $10.9 million (0.16% of total loans) as compared to $17.1 million (0.29% of total loans) at June 30, 2017 and $13.2 million (0.21% of total loans) at December 31, 2017. Nonperforming assets amounted to $12.3 million (0.16% of total assets) at June 30, 2018 compared to $18.5 million (0.26% of total assets) at June 30, 2017 and $14.6 million (0.20% of total assets) at December 31, 2017.

Management continues to remain attentive to any signs of deterioration in borrowers’ financial conditions and is proactive in taking the appropriate steps to mitigate risk. Furthermore, the Company is diligent in placing loans on nonaccrual status and believes, based on its loan portfolio risk analysis, that its allowance for credit losses, at 1.00% of total loans (excluding loans held for sale) at June 30, 2018, is adequate to absorb potential credit losses within the loan portfolio at that date. The allowance for credit losses was 1.02% at June 30, 2017 and 1.01% of total loans at December 31, 2017. The allowance at June 30, 2018 for credit losses represented 612% of nonperforming loans, as compared to 356% at June 30, 2017 and 489% at December 31, 2017.

“The Company’s productivity continued to be very favorable in the second quarter,” noted Mr. Paul. The efficiency ratio of 38.55% reflects management’s ongoing efforts to maintain superior operating leverage. The annualized level of noninterest expenses as a percentage of average assets has declined to 1.66% in the second quarter of 2018 as compared to 1.72% in the second quarter of 2017. A stable staff, capacity utilization, branch rationalization, a low level of problem assets, and leveraging of other fixed costs have been the major reasons for improved operating leverage. The Company continues to make investments in its infrastructure including IT systems and resources and online client services. Our goal is to improve operating performance without inhibiting growth or negatively impacting our ability to service our customers. Mr. Paul further noted, “We will continue to maintain strict oversight of expenses, while retaining an infrastructure to remain competitive, support our growth initiatives, manage risk, and proactively enhance our risk management systems as we continue to grow.”

Total assets at June 30, 2018 were $7.88 billion, a 9% increase as compared to $7.24 billion at June 30, 2017, and a 5% increase as compared to $7.48 billion at December 31, 2017. Total loans (excluding loans held for sale) were $6.65 billion at June 30, 2018, an 11% increase as compared to $5.99 billion at June 30, 2017, and a 4% increase as compared to $6.41 billion at December 31, 2017. Loans held for sale amounted to $30.5 million at June 30, 2018 as compared to $49.3 million at June 30, 2017, a 38% decrease, and $25.1 million at December 31, 2017, a 22% increase. The investment portfolio totaled $656.9 million at June 30, 2018, a 32% increase from the $497.7 million balance at June 30, 2017. As compared to December 31, 2017, the investment portfolio at June 30, 2018 increased by $67.6 million or 12%.

Total deposits at June 30, 2018 were $6.27 billion, compared to deposits of $5.87 billion at June 30, 2017, a 7% increase, and deposits of $5.85 billion at December 31, 2017, a 7% increase. Total borrowed funds (excluding customer repurchase agreements) were $517.1 million at June 30, 2018, $361.7 million at June 30, 2017 and $541.9 million at December 31, 2017. We continue to work on expanding the breadth and depth of our existing relationships while we pursue building new relationships.

Total shareholders’ equity at June 30, 2018 increased 13%, to $1.02 billion, compared to $902.7 million at June 30, 2017, and increased 8%, from $950.4 million at December 31, 2017. The Company’s capital position remains substantially in excess of regulatory requirements for well capitalized status, with a total risk based capital ratio of 15.59% at June 30, 2018, as compared to 15.13% at June 30, 2017, and 15.02% at December 31, 2017. In addition, the tangible common equity ratio was 11.79% at June 30, 2018, compared to 11.15% at June 30, 2017 and 11.44% at December 31, 2017.

Analysis of the three months ended June 30, 2018 compared to June 30, 2017

For the three months ended June 30, 2018, the Company reported an annualized ROAA of 1.92% as compared to 1.60% for the three months ended June 30, 2017. The annualized ROACE for the three months ended June 30, 2018 was 14.93% as compared to 12.51% for the three months ended June 30, 2017. The annualized ROATCE for the three months ended June 30, 2018 was 16.71% as compared to 14.22% for the three months ended June 30, 2017.

Net interest income increased 12% for the three months ended June 30, 2018 over the same period in 2017 ($78.2 million versus $69.7 million), resulting from growth in average earning assets of 12%. The net interest margin was 4.15% for the three months ended June 30, 2018, as compared to 4.16% for the three months ended June 30, 2017. The Company believes its current net interest margin remains favorable compared to peer banking companies and that its disciplined approach to managing the loan portfolio yield to 5.53% for the second quarter of 2018 (as compared to 5.14% for the same period in 2017) has been a significant factor in its overall profitability.

The provision for credit losses was $1.7 million for the three months ended June 30, 2018 as compared to $1.6 million for the three months ended June 30, 2017. Net charge-offs of $848 thousand in the second quarter of 2018 represented an annualized 0.05% of average loans, excluding loans held for sale, as compared to $367 thousand, or an annualized 0.02% of average loans, excluding loans held for sale, in the second quarter of 2017. Net charge-offs in the second quarter of 2018 were attributable primarily to commercial real estate loans ($479 thousand) and commercial loans ($385 thousand).

Noninterest income for the three months ended June 30, 2018 decreased to $5.6 million from $7.0 million for the three months ended June 30, 2017, a 21% decrease, due substantially to lower gains on the sale of residential mortgage loans ($1.7 million versus $2.5 million) resulting from lower volume as compared to 2017, and minimal revenue associated with the origination, securitization, servicing, and sale of FHA Multifamily-Backed GNMA securities as compared to $752 thousand during the second quarter of 2017. Residential mortgage loans closed were $126 million for the second quarter of 2018 versus $188 million for the second quarter of 2017.

The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was 38.55% for the second quarter of 2018, as compared to 39.10% for the second quarter of 2017. Noninterest expenses totaled $32.3 million for the three months ended June 30, 2018, as compared to $30.0 million for the three months ended June 30, 2017, an 8% increase. Cost increases for salaries and benefits were $943 thousand, due primarily to merit increases and benefit costs. Data processing expense increased by $407 thousand due primarily to the costs of software and infrastructure investments. Legal, accounting and professional fees increased $882 thousand due to due diligence from independent consultants associated with the internet event late in 2017 and efforts to enhance our risk management systems.

Analysis of the six months ended June 30, 2018 compared to June 30, 2017

For the six months ended June 30, 2018, the Company reported an annualized ROAA of 1.91% as compared to 1.61% for the six months ended June 30, 2017. The annualized ROACE for the six months ended June 30, 2018 was 14.96% as compared to 12.62% for the six months ended June 30, 2017. The annualized ROATCE for the six months ended June 30, 2018 was 16.78% as compared to 14.38% for the six months ended June 30, 2017.

Net interest income increased 13% for the six months ended June 30, 2018 over the same period in 2017 ($154.0 million versus $136.6 million), resulting from growth in average earning assets of 13%. The net interest margin was 4.16% for both the six months ended June 30, 2018 and 2017. The Company believes its current net interest margin remains favorable compared to peer banking companies and that its disciplined approach to managing the loan portfolio yield to 5.42% for the first six months of 2018 (as compared to 5.15% for the same period in 2017) has been a significant factor in its overall profitability.

The provision for credit losses was $3.6 million for the six months ended June 30, 2018 as compared to $3.0 million for the six months ended June 30, 2017. The higher provisioning for the six months ended June 30, 2018, as compared to the same period in 2017, is due primarily to higher net charge-offs. Net charge-offs of $1.8 million for the six months ended June 30, 2018 represented an annualized 0.05% of average loans, excluding loans held for sale, as compared to $989 thousand, or an annualized 0.03% of average loans, excluding loans held for sale, in the first six months of 2017. Net charge-offs in the first six months of 2018 were attributable primarily to commercial loans ($1.4 million) and commercial real estate loans ($540 thousand) offset by a net recovery in consumer loans ($135 thousand).

Noninterest income for the six months ended June 30, 2018 decreased to $10.9 million from $13.1 million for the six months ended June 30, 2017, a 17% decrease, due substantially to lower gains on the sale of residential mortgage loans ($2.9 million versus $4.3 million) resulting from lower volume as compared to 2017, and minimal revenue associated with the origination, securitization, servicing, and sale of FHA Multifamily-Backed GNMA securities for the six months ended June 30, 2018 versus $752 thousand for the same period in 2017. Residential mortgage loans closed were $226 million for the six months ended June 30, 2018 versus $338 million for the same period in 2017.

Noninterest expenses totaled $63.4 million for the six months ended June 30, 2018, as compared to $59.2 million for the six months ended June 30, 2017, a 7% increase. Cost increases for salaries and benefits for the six months ended June 30, 2018 were $1.1 million, due primarily to merit increases and benefit costs. Data processing expense increased by $683 thousand due primarily to the costs of software and infrastructure investments. Legal, accounting and professional fees increased $2.9 million due to due diligence from independent consultants associated with the internet event late in 2017 and efforts to enhance our risk management systems. Other expenses decreased $1.1 million, due primarily to a net loss on the sale of OREO in the first quarter of 2017 ($361 thousand) and lower costs to maintain OREO properties ($276 thousand). For the first six months of 2018, the efficiency ratio was 38.47% as compared to 39.57% for the same period in 2017.

The financial information which follows provides more detail on the Company’s financial performance for the three and six months ended June 30, 2018 as compared to the three and six months ended June 30, 2017 as well as providing eight quarters of trend data. Persons wishing additional information should refer to the Company’s Form 10-K for the year ended December 31, 2017 and other reports filed with the Securities and Exchange Commission (the “SEC”).

About Eagle Bancorp: The Company is the holding company for EagleBank, which commenced operations in 1998. The Bank is headquartered in Bethesda, Maryland, and operates through twenty branch offices, located in Suburban Maryland, Washington, D.C. and Northern Virginia. The Company focuses on building relationships with businesses, professionals and individuals in its marketplace.

Conference Call: Eagle Bancorp will host a conference call to discuss its second quarter 2018 financial results on Thursday, July 19, 2018 at 10:00 a.m. eastern daylight time. The public is invited to listen to this conference call by dialing 1.877.303.6220, conference ID Code is 5875946, or by accessing the call on the Company’s website, www.EagleBankCorp.com. A replay of the conference call will be available on the Company’s website through August 2, 2018.

Forward-looking Statements: This press release contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. For details on factors that could affect these expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and in other periodic and current reports filed with the SEC. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company’s past results are not necessarily indicative of future performance.

Eagle Bancorp, Inc.

Consolidated Financial Highlights (Unaudited)

(dollars in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

Income Statements:

Total interest income

$

96,296

$

79,344

$

185,345

$

155,138

Total interest expense

18,086

9,646

31,355

18,546

Net interest income

78,210

69,698

153,990

136,592

Provision for credit losses

1,650

1,566

3,619

2,963

Net interest income after provision for credit losses

76,560

68,132

150,371

133,629

Noninterest income (before investment gains)

5,526

6,997

10,788

12,562

Gain on sale of investment securities

26

26

68

531

Total noninterest income

5,552

7,023

10,856

13,093

Total noninterest expense

32,289

30,001

63,410

59,233

Income before income tax expense

49,823

45,154

97,817

87,489

Income tax expense

12,528

17,382

24,807

32,700

Net income

$

37,295

$

27,772

$

73,010

$

54,789

Per Share Data:

Earnings per weighted average common share, basic

$

1.09

$

0.81

$

2.13

$

1.61

Earnings per weighted average common share, diluted

$

1.08

$

0.81

$

2.12

$

1.60

Weighted average common shares outstanding, basic

34,305,693

34,128,598

34,283,412

34,099,228

Weighted average common shares outstanding, diluted

34,448,354

34,324,120

34,427,613

34,304,285

Actual shares outstanding at period end

34,305,071

34,169,924

34,305,071

34,169,924

Book value per common share at period end

$

29.82

$

26.42

$

29.82

$

26.42

Tangible book value per common share at period end (1)

$

26.71

$

23.28

$

26.71

$

23.28

Performance Ratios (annualized):

Return on average assets

1.92%

1.60%

1.91%

1.61%

Return on average common equity

14.93%

12.51%

14.96%

12.62%

Return on average tangible common equity

16.71%

14.22%

16.78%

14.38%

Net interest margin

4.15%

4.16%

4.16%

4.16%

Efficiency ratio (2)

38.55%

39.10%

38.47%

39.57%

Other Ratios:

Allowance for credit losses to total loans (3)

1.00%

1.02%

1.00%

1.02%

Allowance for credit losses to total nonperforming loans

612.42%

356.00%

612.42%

356.00%

Nonperforming loans to total loans (3)

0.16%

0.29%

0.16%

0.29%

Nonperforming assets to total assets

0.16%

0.26%

0.16%

0.26%

Net charge-offs (annualized) to average loans (3)

0.05%

0.02%

0.05%

0.03%

Common equity to total assets

12.98%

12.46%

12.98%

12.46%

Tier 1 capital (to average assets)

11.97%

11.61%

11.97%

11.61%

Total capital (to risk weighted assets)

15.59%

15.13%

15.59%

15.13%

Common equity tier 1 capital (to risk weighted assets)

11.89%

11.18%

11.89%

11.18%

Tangible common equity ratio (1)

11.79%

11.15%

11.79%

11.15%

Loan Balances - Period End (in thousands):

Commercial and Industrial

$

1,467,088

$

1,319,736

$

1,467,088

$

1,319,736

Commercial real estate - owner occupied

$

852,697

$

660,066

$

852,697

$

660,066

Commercial real estate - income producing

$

3,000,385

$

2,596,230

$

3,000,385

$

2,596,230

1-4 Family mortgage

$

103,415

$

151,115

$

103,415

$

151,115

Construction - commercial and residential

$

1,087,287

$

1,034,902

$

1,087,287

$

1,034,902

Construction - C&I (owner occupied)

$

48,480

$

116,577

$

48,480

$

116,577

Home equity

$

89,539

$

103,671

$

89,539

$

103,671

Other consumer

$

2,811

$

2,734

$

2,811

$

2,734

Average Balances (in thousands):

Total assets

$

7,789,564

$

6,959,994

$

7,694,055

$

6,866,597

Total earning assets

$

7,558,138

$

6,728,055

$

7,466,348

$

6,633,740

Total loans

$

6,569,931

$

5,895,174

$

6,502,207

$

5,800,742

Total deposits

$

6,269,126

$

5,660,119

$

6,166,640

$

5,607,552

Total borrowings

$

485,729

$

375,124

$

504,444

$

346,791

Total shareholders’ equity

$

1,002,091

$

890,498

$

984,436

$

875,223

(1) Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per common share are non-GAAP financial measures derived from GAAP based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders' equity and dividing by tangible assets. The Company calculates tangible book value per common share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which the Company calculates by dividing common shareholders' equity by common shares outstanding. The Company calculates return on average tangible common equity by dividing annualized year to date net income by tangible common equity. The Company considers this information important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk based ratios and as such is useful for investors, regulators, management and others to evaluate capital adequacy and to compare against other financial institutions. The table below provides a reconciliation of these non-GAAP financial measures with financial measures defined by GAAP.

GAAP Reconciliation (Unaudited)

(dollars in thousands except per share data)

Three Months Ended

Six Months Ended

Twelve Months Ended

Three Months Ended

Six Months Ended

June 30, 2018

June 30, 2018

December 31, 2017

June 30, 2017

June 30, 2017

Common shareholders' equity

$

1,023,137

$

950,438

$

902,675

Less: Intangible assets

(106,820

)

(107,212

)

(107,061

)

Tangible common equity

$

916,317

$

843,226

$

795,614

Book value per common share

$

29.82

$

27.80

$

26.42

Less: Intangible book value per common share

(3.11

)

(3.13

)

(3.14

)

Tangible book value per common share

$

26.71

$

24.67

$

23.28

Total assets

$

7,880,017

$

7,479,029

$

7,244,527

Less: Intangible assets

(106,820

)

(107,212

)

(107,061

)

Tangible assets

$

7,773,197

$

7,371,817

$

7,137,466

Tangible common equity ratio

11.79%

11.44%

11.15%

Average common shareholders' equity

$

1,002,091

$

984,436

$

906,174

$

890,501

$

875,225

Less: Average intangible assets

(106,955

)

(107,112

)

(107,117

)

(107,050

)

(107,153

)

Average tangible common equity

$

895,136

$

877,324

$

799,057

$

783,450

$

768,072

Net Income Available to Common Shareholders

$

37,295

$

73,010

$

100,232

$

27,772

$

54,789

Average tangible common equity

$

895,136

$

877,324

$

799,057

$

783,450

$

768,072

Annualized Return on Average Tangible Common Equity

16.71%

16.78%

12.54%

14.22%

14.38%

(2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income.

Interest bearing deposits with other banks and other short-term investments

$

302,991

$

1,274

1.69

%

$

267,123

$

610

0.92

%

Loans held for sale (1)

25,621

291

4.54

%

38,165

388

4.07

%

Loans (1) (2)

6,569,931

90,633

5.53

%

5,895,174

75,508

5.14

%

Investment securities available for sale (2)

643,409

4,058

2.53

%

520,951

2,827

2.18

%

Federal funds sold

16,186

40

0.99

%

6,642

11

0.66

%

Total interest earning assets

7,558,138

96,296

5.11

%

6,728,055

79,344

4.73

%

Total noninterest earning assets

297,601

292,119

Less: allowance for credit losses

66,175

60,180

Total noninterest earning assets

231,426

231,939

TOTAL ASSETS

$

7,789,564

$

6,959,994

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest bearing liabilities:

Interest bearing transaction

$

444,842

$

815

0.73

%

$

360,574

$

337

0.37

%

Savings and money market

2,647,910

8,546

1.29

%

2,679,337

4,097

0.61

%

Time deposits

1,123,330

4,687

1.67

%

781,864

1,969

1.01

%

Total interest bearing deposits

4,216,082

14,048

1.34

%

3,821,775

6,403

0.67

%

Customer repurchase agreements

38,438

62

0.65

%

69,093

40

0.23

%

Other short-term borrowings

230,223

997

1.71

%

89,355

224

0.99

%

Long-term borrowings

217,068

2,979

5.43

%

216,676

2,979

5.44

%

Total interest bearing liabilities

4,701,811

18,086

1.54

%

4,196,899

9,646

0.92

%

Noninterest bearing liabilities:

Noninterest bearing demand

2,053,044

1,838,344

Other liabilities

32,618

34,253

Total noninterest bearing liabilities

2,085,662

1,872,597

Shareholders’ Equity

1,002,091

890,498

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

7,789,564

$

6,959,994

Net interest income

$

78,210

$

69,698

Net interest spread

3.57

%

3.81

%

Net interest margin

4.15

%

4.16

%

Cost of funds

0.96

%

0.57

%

(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $5.2 million and $4.3 million for the three months ended June 30, 2018 and 2017, respectively.

Interest bearing deposits with other banks and other short-term investments

$

292,772

$

2,255

1.55

%

$

269,613

$

1,093

0.82

%

Loans held for sale (1)

25,293

565

4.47

%

33,796

670

3.96

%

Loans (1) (2)

6,502,207

174,789

5.42

%

5,800,742

147,697

5.15

%

Investment securities available for sale (1)

628,818

7,650

2.45

%

523,566

5,660

2.19

%

Federal funds sold

17,258

86

1.00

%

6,023

18

0.60

%

Total interest earning assets

7,466,348

185,345

5.01

%

6,633,740

155,138

4.73

%

Total noninterest earning assets

293,488

292,603

Less: allowance for credit losses

65,781

59,746

Total noninterest earning assets

227,707

232,857

TOTAL ASSETS

$

7,694,055

$

6,866,597

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest bearing liabilities:

Interest bearing transaction

$

409,066

$

1,279

0.63

%

$

345,986

$

575

0.34

%

Savings and money market

2,708,480

14,210

1.06

%

2,684,900

7,961

0.60

%

Time deposits

1,006,356

7,688

1.54

%

759,942

3,697

0.98

%

Total interest bearing deposits

4,123,902

23,177

1.13

%

3,790,828

12,233

0.65

%

Customer repurchase agreements

53,158

112

0.42

%

69,359

78

0.23

%

Other short-term borrowings

234,267

2,108

1.79

%

60,808

277

0.91

%

Long-term borrowings

217,019

5,958

5.46

%

216,624

5,958

5.47

%

Total interest bearing liabilities

4,628,346

31,355

1.37

%

4,137,619

18,546

0.91

%

Noninterest bearing liabilities:

Noninterest bearing demand

2,042,738

1,816,724

Other liabilities

38,535

37,031

Total noninterest bearing liabilities

2,081,273

1,853,755

Shareholders’ equity

984,436

875,223

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

7,694,055

$

6,866,597

Net interest income

$

153,990

$

136,592

Net interest spread

3.64

%

3.82

%

Net interest margin

4.16

%

4.16

%

Cost of funds

0.85

%

0.57

%

(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $9.9 million and $8.2 million for the six months ended June 30, 2018 and 2017, respectively.

(1) Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per common share are non-GAAP financial measures derived from GAAP based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders' equity and dividing by tangible assets. The Company calculates tangible book value per common share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which the Company calculates by dividing common shareholders' equity by common shares outstanding. The Company considers this information important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk based ratios and as such is useful for investors, regulators, management and others to evaluate capital adequacy and to compare against other financial institutions.

(2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income.

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